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Insurance is always a bad deal financially on average, or the insurance company wouldn't offer it. An insurance is little more than a bet, and you wouldn't expect a gambling company to offer you odds that they lose money on.
That said, financial loss on average doesn't mean loss of happiness on average. You will be really happy about that insurance if your house burns down, but paying the insurance doesn't really affect you at all, or maybe even increase your quality of life even if the house doesn't burn down, due to peace of mind.
So personally, I'll take an insurance if it is an insurance for something that'll screw me over completely if I don't have it, such as house burning down, but will not take an insurance for thing that I can handle even if something happens, such as stolen bike. Up to you how you judge your case in this aspect.
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What if you take an insurance to be protected from other insurance you have already purchase???
Insuranception
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On May 04 2015 09:03 Djzapz wrote:
I want to preface this post by saying that insurance companies are the fucking devil. Now please help me understand something, and if you work in insurance I apologize for my earlier comment, I only dislike your employers. And if you're the employer, get fucked.
My mother has life insurances on both me and my brother for a non-taxable thousand grand ($100,000), where upon death of myself or my brother, the other sibling would receive said amount of money. She bought these when we were young.
Since I'm 25 now, I'll be taking over the payment for these insurances, amounting to $25/mo, which again would give 100k to my brother if I kicked the bucket (not literally, as per company policy). The insurance was purchased in the early 90's when undoubtedly the interest rates were better, and my mother is saying that if we were to purchase such a life insurance now, it would cost $90/mo instead of the current $25/mo.
Am I correct in saying that they expect to make money on a life insurance worth 100k @ $25/mo because the person will either drop the life insurance before their death OR the person will live long enough for the $25/mo+interest will STILL be enough to pay off the payout at the end of life....
I intend to pay for the insurance, even though I disagree with it, because I can afford it and my mother would want me to. I feel like it's a little bit silly to have a life insurance which would benefit a person who's not dependent upon me financially. My main concern and the reason why I'm asking this is because I don't like the concept of insurance and I can't help to wonder how much I'm getting fucked.
For all intents and purposes, insurance companies are taking bets on your health, life, and property. They are willing to bet, that for as long as you are willing to pay their premium, person x won't die, your house won't be destroyed by a tornado and in the US for example, that you won't be hospitalized with some expensive, rare disease. In the latter case, it was a big deal for pre-existing medical conditions because why would I take a shitty bet?
Let's assume now, that your mother bought the policy when you were three, and you or her paid the 25$ a month until your brother, who is in great health lives to the ripe old age of 88. Assuming the premium never goes up or down, you'll have paid $25,500 over the course of 85 years, which, if properly invested, could mature to cover the pay out cost. Multiply that out over however many other people have been paying that much, if not more for coverage, you got a nice business.
![[image loading]](http://i.imgur.com/lxZaujD.png)
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@Velja That doesn't exist because there is no uncertainty involved in paying insurances.
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Yeah I recognize that it's gambling against the house which has determined that their odds are better than mine. I was wondering if someone who knew the business would know basically how my bad my deal in particular is. I threw in some numbers in an compound interest calculator, being completely unsure whether it was realistic (but frankly no one knows what the interest rate will look like for the next 60 years). I chose a very, very conservative interest rate of 5%.
I input for $25/mo:
$0 starting principal
addition of $300 a year
60 years to grow
5% interest rate
It adds up to $117k from age 25 to 85. I don't expect to live that long.
Assuming a consistent 9% interest rate rather than 5%, it takes 39 years for the policy to be profitable for them
Given that the same policy is now $90/mo, I tested it to see.
$0 starting principal
addition of $1080 a year
60 years to grow
5% interest rate
It adds up to $400k from age 25 to 85.
It adds up to $102k from age 25 to 60. They're essentially betting that you'll live for 35 years.
It doesn't seem to me like defaulting into the old price is that bad for me, ignoring the payments made in the past which pretty much ensure that the insurance company is making money.
I still hate the concept.
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Yeah, but I guess the idea in this case is that it would give my mother some peace to know that my brother would have some money to get through if I were to die in 5 years. I don't think he'd need it, but she seems to. And in this case, if I invested $25/mo in the stock market @ 6% interest rate it would amount to like $1800 in 5 years.
I still disagree with it but if it can give her some peace of mind (she really insists that I take over the payments), then I think I'll do it.
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Having a live insurance on your brother seems a bit strange anyway?
I get it if you do it for your Wife or Kids (until they work themselves)... But your Brother? Thats just you paying 25$/mo to cash out on a tragedy to "win" money you shouldn't need anyway?
Assuming your brother is not paying your living expenses (or vice versa).
If your mother did not have decent savings, it can make sense to get such a live insurance. UNTIL you got a normal income yourself (your insuring the worst case scenario here)... If you Keep it longer than that it becomes pure gambling and I would recommend you to just spend the 25$ on some random shit once a month.
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On May 04 2015 22:29 helpman170 wrote:
@Velja That doesn't exist because there is no uncertainty involved in paying insurances.
Insuranception works the other way around. You can not take insurance on your insurance payment, but insurances do take insurances against a single event getting them to pay more than they can afford. The trigger could be a given number of claims, or a given amount claimed.
Typically, you pay for personal health insurance. It is a bet from your insurer that you will stay healthy enough.
Your health insurance pays a reinsurer against claim amounts reaching a given threshold. It is a bet from the reinsurer that there won't be a major disaster or epidemic in a given timeframe.
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On May 04 2015 23:20 Velr wrote:
Having a live insurance on your brother seems a bit strange anyway?
I get it if you do it for your Wife or Kids (until they work themselves)... But your Brother? Thats just you paying 25$/mo to cash out on a tragedy to "win" money you shouldn't need anyway?
Assuming your brother is not paying your living expenses (or vice versa).
If your mother did not have decent savings, it can make sense to get such a live insurance. UNTIL you got a normal income yourself (your insuring the worst case scenario here)... If you Keep it longer than that it becomes pure gambling and I would recommend you to just spend the 25$ on some random shit once a month.
I agree x_x.
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@Djzapz: so i don't get it - why are you still alive?
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On May 04 2015 23:52 Djzapz wrote:Show nested quote +On May 04 2015 23:20 Velr wrote:
Having a live insurance on your brother seems a bit strange anyway?
I get it if you do it for your Wife or Kids (until they work themselves)... But your Brother? Thats just you paying 25$/mo to cash out on a tragedy to "win" money you shouldn't need anyway?
Assuming your brother is not paying your living expenses (or vice versa).
If your mother did not have decent savings, it can make sense to get such a live insurance. UNTIL you got a normal income yourself (your insuring the worst case scenario here)... If you Keep it longer than that it becomes pure gambling and I would recommend you to just spend the 25$ on some random shit once a month. I agree x_x.
What happens when you'll have a family? Then you'll probably have to pay a life insurance to make sure that your wife and children get money if you die too, right?
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yeah everyone knows from Columbo that life insurances always end in murder
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On May 04 2015 09:03 Djzapz wrote:
I want to preface this post by saying that insurance companies are the fucking devil. Now please help me understand something, and if you work in insurance I apologize for my earlier comment, I only dislike your employers. And if you're the employer, get fucked.
My mother has life insurances on both me and my brother for a non-taxable thousand grand ($100,000), where upon death of myself or my brother, the other sibling would receive said amount of money. She bought these when we were young.
Since I'm 25 now, I'll be taking over the payment for these insurances, amounting to $25/mo, which again would give 100k to my brother if I kicked the bucket (not literally, as per company policy). The insurance was purchased in the early 90's when undoubtedly the interest rates were better, and my mother is saying that if we were to purchase such a life insurance now, it would cost $90/mo instead of the current $25/mo.
Am I correct in saying that they expect to make money on a life insurance worth 100k @ $25/mo because the person will either drop the life insurance before their death OR the person will live long enough for the $25/mo+interest will STILL be enough to pay off the payout at the end of life....
I intend to pay for the insurance, even though I disagree with it, because I can afford it and my mother would want me to. I feel like it's a little bit silly to have a life insurance which would benefit a person who's not dependent upon me financially. My main concern and the reason why I'm asking this is because I don't like the concept of insurance and I can't help to wonder how much I'm getting fucked.
The philosophical concept of insurance is sharing the load of large cost responsibilities. Its not that you're paying $25/month pay for your insurance, but to help others who are in need of that money right now (other insurance holders) with the comfort that when you yourself need help, your fellow insurance holders would be able to help you as well. Its a community of your peers watching out for each other when you're in times of need.
Saying all that--fuck insurance companies in their tiny unlubricated dickholes.
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On May 05 2015 00:04 xM(Z wrote:
@Djzapz: so i don't get it - why are you still alive?
No idea!
On May 05 2015 00:04 OtherWorld wrote:Show nested quote +On May 04 2015 23:52 Djzapz wrote:On May 04 2015 23:20 Velr wrote:
Having a live insurance on your brother seems a bit strange anyway?
I get it if you do it for your Wife or Kids (until they work themselves)... But your Brother? Thats just you paying 25$/mo to cash out on a tragedy to "win" money you shouldn't need anyway?
Assuming your brother is not paying your living expenses (or vice versa).
If your mother did not have decent savings, it can make sense to get such a live insurance. UNTIL you got a normal income yourself (your insuring the worst case scenario here)... If you Keep it longer than that it becomes pure gambling and I would recommend you to just spend the 25$ on some random shit once a month. I agree x_x. What happens when you'll have a family? Then you'll probably have to pay a life insurance to make sure that your wife and children get money if you die too, right?
The beneficiary is transferable, so I would probably just transfer it over to them when that happened.
On May 05 2015 00:06 helpman170 wrote:
yeah everyone knows from Columbo that life insurances always end in murder
If someone killed me for $100k, I'd be simultaneously insulted AND dead.
On May 05 2015 00:22 Thieving Magpie wrote:Show nested quote +On May 04 2015 09:03 Djzapz wrote:
I want to preface this post by saying that insurance companies are the fucking devil. Now please help me understand something, and if you work in insurance I apologize for my earlier comment, I only dislike your employers. And if you're the employer, get fucked.
My mother has life insurances on both me and my brother for a non-taxable thousand grand ($100,000), where upon death of myself or my brother, the other sibling would receive said amount of money. She bought these when we were young.
Since I'm 25 now, I'll be taking over the payment for these insurances, amounting to $25/mo, which again would give 100k to my brother if I kicked the bucket (not literally, as per company policy). The insurance was purchased in the early 90's when undoubtedly the interest rates were better, and my mother is saying that if we were to purchase such a life insurance now, it would cost $90/mo instead of the current $25/mo.
Am I correct in saying that they expect to make money on a life insurance worth 100k @ $25/mo because the person will either drop the life insurance before their death OR the person will live long enough for the $25/mo+interest will STILL be enough to pay off the payout at the end of life....
I intend to pay for the insurance, even though I disagree with it, because I can afford it and my mother would want me to. I feel like it's a little bit silly to have a life insurance which would benefit a person who's not dependent upon me financially. My main concern and the reason why I'm asking this is because I don't like the concept of insurance and I can't help to wonder how much I'm getting fucked. The philosophical concept of insurance is sharing the load of large cost responsibilities. Its not that you're paying $25/month pay for your insurance, but to help others who are in need of that money right now (other insurance holders) with the comfort that when you yourself need help, your fellow insurance holders would be able to help you as well. Its a community of your peers watching out for each other when you're in times of need. Saying all that--fuck insurance companies in their tiny unlubricated dickholes.
Amen brother.
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Note that there exist some rare insurance 'companies' that are 'none-profitable companies'. Which means that they are build along certain legislations that do not even allow them to make profit (at least I know it is the case in France).
The result is that they give you funding much more willingly when you have any issue. And in my experience it is a whole other world (not as unethical as the usual insurance business).
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I wonder why you guys think insurance business is somehow less ethical than... Any other Company?
Baseline is:
They take your money and they will (try) to make a profit with it.
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On May 04 2015 23:08 Djzapz wrote:Yeah, but I guess the idea in this case is that it would give my mother some peace to know that my brother would have some money to get through if I were to die in 5 years. I don't think he'd need it, but she seems to. And in this case, if I invested $25/mo in the stock market @ 6% interest rate it would amount to like $1800 in 5 years. I still disagree with it but if it can give her some peace of mind (she really insists that I take over the payments), then I think I'll do it.
The chance to die between 25 and 35 is about 0.01%.
That's like insuring yourself against alien abduction.
http://www.data360.org/dsg.aspx?Data_Set_Group_Id=587
The reason the insurance companies make money is because people vastly overestimate the risks.
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On May 05 2015 20:22 Velr wrote:
I wonder why you guys think insurance business is somehow less ethical than... Any other Company?
Baseline is:
They take your money and they will (try) to make a profit with it.
Precisely because it is a ran as a business while the idea behind it doesn't include a notion of profit.
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Like... Feeding People? Or healing People?....
Fuck those Stores, Restaurants and Hospitals/Doctors... How dare they make a profit.
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EPT
